AMD Stock Analysis, Valuation (NASDAQ:AMD)
AMD’s stock performance since the listing in the 1970’s can only be termed as erratic. It has been unpredictable in terms of top line growth, with swings in market share and growth coming in spurts and then crashing. AMD revenue showed signs of improvements in 2016, with steady growth for two quarters in a row. The company’s new range of chips also generated some excitement during that year. It remains to be seen if AMD continues this streak in the coming years.
Note: Amigobulls stock rating is our opinion based on the historical performance of the company's fundamentals. It is not indicative of the future performance of the stock.
Advanced Micro Devices, Inc. Stock Rating 2.9/5
Should you buy AMD stock?
- The Year Over Year (YoY) revenue growth for AMD was 67.4% in 2018-03.
- AMD's return on invested capital of 29.1 is good.
- The LTM ROE of 36.9 for AMD is attractive.
Should you sell AMD stock?
- With a debt/equity ratio of 1.73, AMD is highly leveraged in comparison to -sectordesc- peers.
- The company's operations consume more cash than it generates. This is not a healthy sign.
- The AMD stock currently trades at a PE of 81.5, which is expensive, compared to the sector average of 26.1.
- The company has a negative free cash flow margin of -8.
AMD stock analysis must include the growth potential of the semiconductor market. However, in case of AMD, since the company doesn’t really have a major dominance in terms of market share, that aspect may become less important. For instance, in the GPU graphics cards market, for Add-In-Boards (AIBs), which use discrete graphics cards, AMD has a small share of the market, whereas NVIDIA accounts for nearly all of the rest. So, in that sense, AMD doesn’t have much of a moat, so to say, as things stand. AMD analysis shows that the firm has been rather unstable in the past. AMD stock price analysis shows the ups and downs faced by the tech company, especially around year 2000, around the time of the dotcom bust. A look at the market in which AMD operates, shows that the company faces significant pressures from peers like Intel and NVIDIA, among many others.
AMD PE ratio chart is of lesser relevance now because AMD has been recording losses, but if the company does recover, then it can be a handle tool, which prospective investors can use while evaluating the company. AMD price history shows an unstable growth pattern since listing. A serious turnaround could make the stock a more luring target for tech investors.